Enterprise Minister Jim Wallace said the executive would meet its commitment to increase the higher and further education budget by 16% by 2006.

He said: "These figures illustrate the executive's strong track record in higher education investment and underline our commitment to maintaining a
competitive edge in our universities.

"These allocations and increases are a direct result of sustained and increasing executive investment in higher education since devolution - breaking the £800m threshold for the first time."

Jim Wallace said the executive will meet its funding commitments

The minister had previously said that from 2006 - when variable top-up fees are launched in England - Scottish students should get at least as much assistance with costs.

But he warned there could be complications if the executive was to pay up-front the tuition fees of Scots at English universities.

The funding announcement came as MSPs debated a committee report which warned the sector would need
"significant executive funding" to remain competitive.

The Enterprise and Culture Committee report, published in December, concluded the recently approved top-up fees for English universities would generate extra cash for them and allow them to pay higher salaries and attract lecturers down south.

MPs at Westminster voted earlier this year by a majority of just five to approve legislation enabling English universities to charge up to £3,000 a year in tuition fees.

But First Minister Jack McConnell has ruled out top-up university tuition fees in Scotland for as long as he remains in charge.

Extra cash

Universities have already turned their attention to the issue, arguing the executive cannot ignore the potential impact of the top-up fees on Scotland.

Earlier this month, Universities Scotland tabled a demand for an extra £156m a year in a bid to offset the increased competition.

The body, which represents 21 higher educational institutions, also demanded a one-off sum of £230m for building repairs and maintenance.

Its funding plea will be decided following the Scottish Executive's three-year spending review which concludes in September.

Ongoing debate

Scottish National Party education spokeswoman Fiona Hyslop said: "The debate over universities is rolling, leaving the executive behind.

"It's obvious the executive, instead of being proactive and looking to promote and support our universities, is content to sit back and wait until it's time for crisis management."

The Association of University Teachers Scotland (AUTS) said the funding increase averaged 5.5%, well above the 2% pay offer for higher education staff during the same period.

AUTS president Tom McDonnell said: "Institutions can afford to improve the offer and principals should urge the Universities and Colleges Employers Association to return to meaningful negotiations to address our real
concerns."